Mumbai: India’s doubling of import duty will have little impact on the domestic gold market, UBS said in a report on Tuesday.
“Although at the margin it may cut demand slightly, the increase in the price is marginal and the total import tax is too small to reactivate the smuggling channels,” John Reade, head of metals strategy at UBS, said in the report.
Finance minister Pranab Mukherjee announced in the budget for 2009-10, import duty on gold bars is being raised to Rs200 ($4.1) per 10 grams from Rs100 earlier.
The minister said import duty on silver is being raised to Rs1,000 ($20.7) per kg from Rs500 earlier.
“We still expect decent demand from India on dips or in late August even if there has been no price dip,” said Reade.
Monsoon is considered a lean season in India as fewer weddings take place during the period. But a series of festivals and auspicious days for weddings is expected to boost gold demand from August-end till the end of the year.
At 1:15 p.m., Scotia Mocatta quoted spot gold at Rs14,750 per 10 grams as against Rs14,725 on Monday.